Mike Kent, a realtor who sells homes in Birch Bay, Washington says that "about 70 percent of our buyers, for the last three, four months have been from Canada - Vancouver in particular." Kent says that Canadians are following an American trend of purchasing retirement homes and renting them out until they're ready to use these homes.

Another force driving Canadians to shop across the border for second homes is that Canadian real estate prices have soared astronomically in many areas while US home prices have begun to soften. Many Canadian buyers find that they can find a comparable home in the US for one-third to one-half the price of a Canadian home.

The rising Canadian dollar coupled with sharp increases in Western Canada's real estate market will continue to drive more Canadian investors into the American housing market.